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  1. An Assessment of Marcellus and Utica Shale Environmental Issues By: David M. Flannery Carolyn McLain Jackson Kelly PLLC Presented at: Marcellus and Utica Shale Conference and Expo April 2, 2012 White Sulphur Springs, WV

  2. Overview of Presentation • National Programs • Zero Discharge Effluent Guidelines • Waste Management • Selected State Programs • Ohio • Pennsylvania • West Virginia • USEPA Hydraulic Fracturing Study • Interstate Compacts • Air Emissions and Air Quality • Carbon Capture and Sequestration (CCS)

  3. National: Zero Discharge Effluent Guideline Clean Water Act permits: - must meet water quality standards - must meet effluent guidelines Onshore Oil and Gas Effluent Guideline (40 C.F.R. §435.32) - “no discharge of waste water pollutants” - exception: “stripper oil wells” - Appalachian Producers requested exemption “Marginal gas wells” – no action by USEPA - Are Marcellus and Utica Shale wells covered by effluent guidelines? See September 1976 Development Document

  4. National: Waste Management • 1987 – EPA Report to Congress - E&P wastes exempt from RCRA. • Recommended working with states to improve state regulation of E&P wastes. • Interstate Oil and Gas Compact Commission (IOGCC) – established waste management guidelines; initiated audits of state regulatory programs of E&P wastes. • First review completed in 1991. • Review completed for Ohio, Pennsylvania, West Virginia, others • 1999 – State Review of Oil and Natural Gas Environmental Regulations (STRONGER) succeeds to IOGCC. • Currently – State audits ongoing (NC in Feb 2012).

  5. Ohio

  6. Ohio • STRONGER Reviews • 1995 • 2005 • 2011 – Hydraulic Fracturing

  7. STRONGER 2011 Ohio Review Recommendations: • Complete amendment of hydraulic fracturing rules • Consider whether the submittal of MSDS information is adequate • Consider providing chemical information from hydraulic fracturing to first responders. • Evaluate the need and availability and use of water for hydraulic fracturing

  8. Ohio Program Highlights June 20, 2010 – S.B. 165 overhaul of oil and gas regulations. • Increased permitting requirements (urban/non-urban). Fees based on population size ($250 - $1000). • Mandatory pooling agreements (additional $5,000 fee), established minimum acreage units. • Comprehensive reporting requirements. • Prohibits introduction of waste fluids into groundwater or surface water. • Injection disposal fee of $.05 / $.20 per barrel for waste fluids (brine). • Drill cuttings disposed of on-site or sent to a licensed solid waste landfill. • Establishes minimum distances for surface locations of wells from dwellings, RRs, property lines, vessels and other equipment. • Temporary Inactive Status for wells which are not producing within 1 year of completion.

  9. Ohio Program Highlights • May 16, 2011 – prohibition against discharge of brine wastewater to POTWs. • February 2012 - Air General Permit to cover shale gas sites. ($2,300). Permit To Install and Operate – PTIO • Covers internal combustion, generators, dehydration systems, storage tanks and flares. • Does not cover roadways and glycol dehydration units. (But see Proposed Federal Air rules). • March 2012 – Report on Seismic Events near Class II Brine Injection well in the Youngstown area. Recommendations: • Enhanced geologic review for new UIC wells, prohibit UIC wells in known faulted areas, prohibit UIC wells in Precambrian basement, installation of advanced equipment (auto shut-off, continuous pressure monitoring system, electronic data tracking system). • March/April 2012 – Ohio S.B 315 and H.B. 474 – Proposed modifications of brine disposal options (recycling, increased fees).Pending in the legislature.

  10. Pennsylvania

  11. Pennsylvania • STRONGER Reviews • 1992 • 1997 • 2004 • 2010 – Hydraulic Fracturing

  12. STRONGER 2010 Pa. Review Recommendations • Finalize new regulations for casing and cementing, blow-out prevention, etc. • Enhance pre-drilling drinking water well survey requirements. • Add depth of surface casing and cementing plan to program. • Assure appropriate chemical information for fracturing is provided and made available to emergency personnel. • Require notification to agency prior to hydraulic fracturing operations • Enhance procedures for pit construction or create a certification process. • Create a specific secondary containment rule for hydraulic fracturing tanks.

  13. Marcellus Shale Advisory Commission July 22, 2011 99 report recommendations include: • Increasing well bonding to $10,000/$250,000 • Increasing the presumed liability for water well contamination to 2,500 feet/12 months • Increasing setback distances from water wells • Well operators responsible for tracking/reporting wastewater from wells that use 80,000 gallons or more

  14. Pennsylvania Program Highlights • Fees for unconventional gas wells – Signed into law 2/14/2012. Fees determined based on county. • Municipalities may impose their own fees, by municipal ordinance. • PA DEP revised gas wastewater processing permit for beneficial reuse of water. (3/21/2012) Promotes “closed-loop” process but also allows for tested waters to be managed, stored and transported as freshwater.

  15. Pennsylvania Program Highlights • Prohibition against discharge of wastewater to POTWs / centralized treatment facilities (with limited exception) (April 2011) • Collection of air emissions data in preparation for review of the State Implementation Program (Due 3/1/2012). • Erosion and Sediment Control and Stormwater Management Plan required. • Water Management Plan required. • Specifications for dams and impoundments for O&G activities. • Control and Disposal Plan for fluids and drill cuttings. • Contingency plans for transportation of residual wastes and containment practices plans. • Emergency Response Plans

  16. West Virginia

  17. West Virginia • STRONGER Reviews • December 1993 • January 2003 (follow-up review)

  18. West Virginia • Governor Tomblin Executive Order No. 4-11, July 12, 2011 • Prohibition of land application of return fluids • Prohibition of disposal of return fluids to POTWs • Increase regulations to ensure no pollutants are disposed of in violation of water quality standards or effluent limitations.

  19. West Virginia Emergency Rules: Effective August 22, 2011. • Requiring water management plans for withdrawals greater than 210,000 gallons per month to include: type of water source, volume, duration, disposal plan, list of anticipated additives for fracturing or stimulation; current designated and existing uses; in-stream flow impacts; maintain minimum flow; post signs, etc. • Requiring well site construction and safety plan • Prevent fluids/natural gas from entering groundwater or surface water • BMPs to prevent suspended or dissolved solids discharge to streams. • Require drill cuttings and drill muds to be disposed of off-site (or managed on-site) as approved by WVDEP. • Consider other rulemakings to address: well construction, air emissions, recycling, etc.

  20. West Virginia • WV Natural Gas Horizontal Well Control Act (adopted 12/14/2011) • Applies to new horizontal wells which disturb 3 acres or more or utilizes >210,000 gallons of water in 30-day period • Erosion and sediment control plan, water management plan • Drilling waste can be managed on-site (with surface owner consent) or to approved solid waste facility • Additional record keeping requirements for water withdrawals greater than 210,000 gallons per month • Pit impoundment specifications • Appeal available to Environmental Quality Board • Increased notice requirements to landowners.

  21. West Virginia • EPA Region III has taken lead agency status for all Section 404 enforcement actions (45+) for WV. • Proposed NPDES construction general permit for stormwater runoff from oil & gas sites which disturb more than 1 acre and are not otherwise regulated by the Office of Oil and Gas or another Stormwater permit. Comments due by 4/19/2012.

  22. WV: Water Disposal* • Prohibition against on-site stream discharge • UIC – “best option” • Recycling • POTW option heavily restricted; none authorized at this time * Office of Oil and Gas, Industry Guidance, January 8, 2010

  23. WV: Land Application General Permit General Water Pollution Control Permit (GP-1-WV-88) – “land application permit” - no discharge to streams - pit liquids treated / land applied - pit solids disposed on site July 30, 2010 Office of Oil and Gas memorandum “land application of any return fluids from completion activities in the Marcellus Shale formation is prohibited”

  24. WV: Drilling Pit Reclamation* Requirements: 1. Pit liners remain intact 2. Pit contents must be solidified with approved materials 3. A liner must be placed over the top of pit * Office of Oil and Gas, Memorandum, March 23, 2010

  25. WV: Water Withdrawal* • W.Va. Code Chapter 22, Article 26 requires after-the-fact reporting • Office of Oil and Gas now requires prior reporting and approval: • supplemental permit application form • no withdrawal allowed “at volumes beyond which the waters can sustain” • Water Withdrawal Guidance Tool * Office of Oil and Gas, Industry Guidance, January 8, 2011

  26. USEPA Hydraulic Fracturing Study

  27. USEPA Hydraulic Fracturing Study • February 28, 2011 request to EPA Science Advisory Board • Initial results: end of 2012 • Additional results: 2014 • Scope: • acquisition of water • chemical additives • fracturing • flow back management (including treatment and disposal)

  28. Interstate Compacts

  29. Interstate Compacts • Susquehanna River Basin Commission (SRBC) • water withdrawal • water quality standards • Delaware River Basin Commission (DRBC) • water withdrawal • water quality / discharge • Ohio River Valley Water Sanitation Commission (ORSANCO) • water quality / discharge • evaluating whether to see expanded authority to address water withdrawal

  30. Air Emissions and Air Quality

  31. EPA Proposed Air Rules Proposed: July 28, 2011; Final Action: April 3, 2012 • NSPS • New Source Performance Standards (NSPS) for VOCs • Applies to new completions and re-completions. • Requires use of “green completions” equipment to separate hydrocarbons from flowback/flaring. Does not apply to exploratory or delineation wells. • New controls on compressors, pneumatic controllers, condensate and crude oil storage tanks and natural gas processing plants. - NSPS for Sulfur Dioxide – Natural gas processing plants (with H2S concentration of at least 50%) need to meet sulfur recovery efficiency of 99.9%.

  32. EPA Proposed Air Rules NESHAP • Oil & Natural Gas Production • Remove the 1 ton/year benzene compliance alternative for large glycol dehydrators. • Large glycol dehydrators required to reduce toxics by 95%. • Small glycol dehydrators at major sources – tighter emission limits. • Crude oil and condensate tanks reduce toxics by 95% • Natural Gas Transmission and Storage - Remove the 1 ton/year benzene compliance alternative for large dehy units and set tighter emission limits for small units

  33. PA Short-Term Ambient Air Screening • Key Findings (May 6, 2011): • Concentrations of certain natural gas constituents including methane, ethane, propane and butane, and associated compounds in the air near Marcellus Shale drilling operations were detected during sampling. • Results of the limited ambient air sampling did not identify concentrations of any compound that would likely trigger air-related health issues associated with Marcellus Shale drilling.

  34. O3 Trends by Region • Average ozone DVs have decreased in all five RPO regions • Trends are not monotonic, possibly reflecting influence of meteorology Performed by Alpine Geophysics for the Midwest Ozone Group (http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)

  35. PM2.5 Trends by Region • Both Annual and 24-hr Average PM2.5 DVs have decreased (negative trends) in all five RPO regions • Trends are not monotonic, possibly reflecting influence of meteorology Performed by Alpine Geophysics for the Midwest Ozone Group (http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)

  36. Air Quality Modeling Performed by Alpine Geophysics for the Midwest Ozone Group(http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)

  37. 8-hour Ozone Modeling Results Performed by Alpine Geophysics for the Midwest Ozone Group (http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)

  38. http://midwestozonegroup.com/files/AlpineGeophysicsOSATAnalysis.pdfhttp://midwestozonegroup.com/files/AlpineGeophysicsOSATAnalysis.pdf

  39. PM 2.5 (Annual) Modeling Results Performed by Alpine Geophysics for the Midwest Ozone Group (http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)

  40. PM 2.5 (24-hour) Modeling Results Performed by Alpine Geophysics for the Midwest Ozone Group (http://midwestozonegroup.com/files/AQTrendsSummary_SoutheasternStates_.pdf)

  41. Air Quality Modeling Results • Residual ozone non-attainment is associated with mobile sources along I-95 • The annual PM NAAQS can be achieved with no new controls no later than 2014 with the possible exception of local controls at the Allegheny PA location • The 24-hr PM NAAQS can be achieved with no new controls no later than 2014 with the possible exception of local controls at the Allegheny PA and Brooke WV locations

  42. CCS

  43. Carbon Capture and Sequestration (CCS) Regulatory drivers for carbon capture and sequestration (CCS) • President’s goal for 83% reduction in CO2 by 2050 • USEPA’sBACT Guidance (November 2010) • USEPA’sNSPS Proposal (March 2012) Recent developments • National Coal Council • West Virginia CCS Working Group Implications for oil and gas

  44. USEPA BACT GUIDANCE* • CCS is not in widespread use • CCS is considered “available” for: - “fossil fuel-fired” power plants - industrial facilities with high-purity CO2 streams (e.g., hydrogen production, ammonia production, natural gas processing, ethanol production, ethylene oxide production, cement production and iron and steel manufacturing) • CCS may be presently available where CO2 can be sold for EOR • Research may make CCS more widely applicable in the future *http://www.epa.gov/nsr/ghgdocs/ghgpermittingguidance.pdf (December 2010)

  45. USEPA NSPS Proposal* • Proposal limit: 1,000 pounds CO2/megawatt-hour (30 year avg.) • Applicable: new fossil-fuel EGUs (boilers, IGCC, stationary combined cycle units) • Natural gas combined cycle: no add-on controls Coal fired units: CCS *http://epa.gov/carbonpollutionstandard/pdfs/20120327proposal.pdf

  46. NATIONAL COAL COUNCIL* RECOMMENDATIONS: • Accelerate near term (2015-2020) development of commercial scale CCS for coal-based generation • Promote CO2storage opportunities for EOR • Exempt CCS from RCRA and CERCLA • Reduce regulatory barriers with PSD and NEPA • Allow a CCS permit to authorize use of pore space which is not being used by its owner • Limit an operator’s legal liability during operation phase • Transfer liability during post closure phase “Expedited CCS Development: Challenges & Opportunities”, March 18, 2011. http://www.nationalcoalcouncil.org/reports/03_29_11_Final_NCC_Report.pdf